Six Steps for Building the Value-Based Hospital

Leading health care providers around the world are embracing a new operating model: the value-based hospital. With a sharp focus on improving patient outcomes, value-based hospitals are improving cost efficiency while increasing competitive advantages in their regions. Here are six steps organizations can take to get started building a hospital that delivers true value:

Assess organizational readiness. Carefully assess operations against a comprehensive set of criteria based on best practices established by leading value-based organizations.

Define the outcomes that matter to key patient groups. Set up multidisciplinary teams, including patients, to define the key outcomes metrics that matter for those groups.

Allocate costs per patient. Discuss how each step in the clinical pathway contributes both to outcomes and to costs.

Implement quick wins. Identify areas that can be immediately improved.

Enhance service function productivity. As suggestions accumulate through pilot programs focussing on key patient groups, consider how functional units such as radiology and ICU may need to change their processes, roles, and performance metrics to better satisfy the needs of high-value patient care.

Institutionalize the value-based approach. Develop recommendations for how the continuous tracking of outcomes and costs per patient can be integrated into the day-to-day management of the organization. Consider adjustment in organizational structure, roles and responsibilities, ensure that IT systems facilitate this work and enable the clinical teams.

US Medicare Advantage Delivers Value

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US Medicare Advantage plans offer a powerful new model for improving health care quality. These plans have found a way to engage the right set of clinicians around the objective of delivering improved value and have effectively realigned financial incentives to help realize improved outcomes.

Take the example of emergency room visits. About 4 in 10 of the patients in a fee-for-service matched sample visited the emergency room at least once in 2011. But for three progressively more managed delivery models, the figure drops—to below 2 in 10.

This decline in emergency room visits could reflect better management between acute episodes, better follow-up and scheduling of specialist visits, or better adherence on the part of patients to their treatment regimens.

There’s also a substantial reduction in the length of time that patients in the Medicare Advantage plan spend in the hospital—about a 19% lower average length of stay compared with the fee-for-service sample. Managed plans also have a lower percentage of readmissions, suggesting that the shorter hospital stays represent genuine improvements in the management of acute episodes of care.

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